BUILD­ING MO­MEN­TUM

GAS­COYNE RE­SOURCES

THERE is light ( and gold) at the end of the tun­nel for Gas­coyne Re­sources, with first gold slated at its Dal­gar­anga project in the sec­ond quar­ter of 2018.

The Dal­gar­anga project within the Murchi­son re­gion WA – for­merly op­er­ated by a JV be­tween Equigold and Western Reefs – pro­duced 229,000 ounces of gold be­tween 1996 and 2000, with lit­tle ex­plo­ration un­der­taken at the site since.

The com­pany’s de­ci­sion to ac­quire Dal­gar­anga has since paid div­i­dends, with the JORC mea­sured, in­di­cated and in­ferred re­sources now sit­ting at 31.1 mil­lion tonnes at 1.3 g/ t gold for 1.32moz of con­tained gold, and proved and prob­a­ble ore re­serve at 14.3mt at 1.27 g/ t for 581,000oz of gold.

In De­cem­ber last year, Gas­coyne Re­sources pur­chased the re­main­ing 20 per in­ter­est.

The project com­prises two open pits; a high- grade Golden Wings de­posit, a cut­back of Gil­beys de­posit; and po­ten­tial third pit, Sly Fox, to come on­line in the next few years.

In Novem­ber 2016, the com­pany com­pleted a fea­si­bil­ity study, which in­cluded de­vel­op­ing a new 2.5 mil­lion tonne per an­num ( mtpa) pro­cess­ing fa­cil­ity at the site.

Re­cent mod­el­ling has also found the plant will be ca­pa­ble of pro­cess­ing more than 3mtpa while treat­ing soft ox­ide and tran­si­tional ore.

GR En­gi­neer­ing was now mo­bilised to site and had be­gun con­crete work in­clud­ing the SAG mill foun­da­tions, CIL tank foun­da­tions and bund­ing, and work­shop and ware­house foun­da­tions.

The tail­ings stor­age fa­cil­ity life and wa­ter evap­o­ra­tion pond con­struc­tion was well ad­vanced as was the wa­ter bore con­struc­tion and de­wa­ter­ing pipe­line.

The ac­cess road and clear­ing for the airstrip was also near­ing com­ple­tion.

Con­struc­tion of the airstrip will be­gin in Oc­to­ber to al­low flights straight into the site from early next year.

From a fi­nan­cial per­spec­tive, the com­pany has man­dated Com­mon­wealth Bank of Aus­tralia ( CBA) and Na­tional Aus­tralia Bank ( NAB) to ar­range a debt fa­cil­ity of up to $ 60 mil­lion to see the project fully funded.

“Man­dat­ing tier 1 Aus­tralian lenders CBA and NAB for the debt fund­ing re­quired for the de­vel­op­ment of the Dal­gar­anga Project is a strong vote of con­fi­dence in the project and the work un­der­taken by the Gas­coyne Team since we fin­ished the Fea­si­bil­ity Study in Novem­ber last year,” Gas­coyne Re­sources man­ag­ing di­rec­tor Mike Dun­bar said.

“The terms we have ne­go­ti­ated high­light the qual­ity of the project.

“With the man­date com­pleted, con­struc­tion will con­tinue on sched­ule to­wards pro­duc­tion in Q2 of next year.”

En­ter­ing pro­duc­tion

The mine will pro­duce about 100,000oz of gold a year.

How­ever, dur­ing its first two years of op­er­a­tion this will be higher at 120,000oz a year while the plant pro­cesses soft ox­ide and tran­si­tional ore.

The higher pro­duc­tion in the first few years was an­nounced ear­lier this year as part of an up­date to the mine de­sign and sched­ule.

Mr Dun­bar said the new plan will see the project now pro­duce 244,000oz in its first two years.

“This rep­re­sents an in­crease of over 35,000 ounces in the first two years of pro­duc­tion when com­pared to the Fea­si­bil­ity Study mine sched­ule, and is ex­pected to have a sig­nif­i­cant pos­i­tive im­prove­ment to the project eco­nomics,” he said.

“This pro­duc­tion pro­file and sched­ule ex­cludes the re­cently dis­cov­ered Sly Fox de­posit, which adds a fur­ther 77,000oz to the re­sources base, and is ex­pected to im­prove the pro­duc­tion pro­file in year three­and four of the op­er­a­tion.

“How­ever the ex­act im­pact is yet to be de­ter­mined as ex­plo­ration is on­go­ing in the re­gion and the JORC mod­i­fy­ing fac­tors yet to be fully de­ter­mined.”

Sly Fox was dis­cov­ered late last year 600 me­tres south of the Gil­beys de­posit, fol­low­ing an air­core drilling cam­paign that found near sur­face and sig­nif­i­cant down­hole thick­nesses of gold min­er­al­i­sa­tion.

Mr Dun­bar said the new min­eral re­source es­ti­mate for Sly Fox fur­ther en­hanced the Dal­gar­anga project’s scale and po­ten­tial to ex­tend the cur­rent mine life of six years.

“With the re­source up­dated and the in­crease in the re­source con­fi­dence, it is ex­pected that a maiden ore re­serve for Sly Fox will be com­pleted in the next month, less than 6 months since the de­posit was dis­cov­ered,” he said.

“The ad­di­tion of these shal­low and soft ores through the mill in the early years is ex­pected to lift the pro­duc­tion rates in the early years of pro­duc­tion.”

Within the com­pany’s name­sake Gas­coyne re­gion, Glen­burgh was its ini­tial first choice to bring into pro­duc­tion be­fore Dal­gar­anga was ac­quired.

While the fo­cus re­mains on Dal­gar­anga at present, the com­pany is con­tin­u­ing to eval­u­ate Glen­burgh to de­fine mean­ing­ful in­creases in the re­source base and progress project per­mit­ting.

The com­pany re­cently com­pleted a 30 hole RC drilling pro­gram at the 1.05 mil­lion ounce re­source, tar­get­ing re­source ex­ten­sions to the Icon, Tuxedo, Apollo, Mus­tang and Torino de­posits, and will soon be­gin up­dat­ing its pre- fea­si­bil­ity study for the project, which hasn’t been up­dated since 2013.

Once given the green light, Glen­burgh de­vel­op­ment could be funded through cash flow from Dal­gar­anga, and en­able Gas­coyne to dou­ble an­nual pro­duc­tion to 200,000oz.